• by Paul Gough , January 6, 2004

TiVo said Monday afternoon that it had filed a patent infringement suit against EchoStar Communications Corp., alleging that the satellite television provider violated a patent when it offered a product that allowed for digital video recording capabilities.

The lawsuit, filed in federal district court in Texas, said that EchoStar - parent company of Dish Network - had violated U.S. Patent No. 6,233,389, which it applied for in June 1998 and was granted in May 2001. The so-called Time Warp patent covers technology for recording a television program while playing another, and pausing live television, as well as fast-forwarding, rewinding, instant replays, and slow motion broadcasts. In other words, many of the capabilities that made TiVo famous. The technology has been licensed to several consumer electronics companies. Other companies, including Dish Network and cable providers, offer digital video recording technology to their customers. The assets of another DVR marketer, ReplayTV, have been purchased by a Japanese consumer electronics manufacturer.

DirecTV, a competitor of Dish Network, offers a DVR through a deal with TiVo that has been enthusiastically embraced by hundreds of thousands of DirecTV customers, and has been responsible for the TiVo service's record-breaking growth in 2003. In the third quarter of 2003 - the latest firm figures available - TiVo added 209,000 subscribers, more than four times the third quarter in 2002. More than 150,000 of those new subscribers came from DirecTV. In the fourth quarter - including the holiday season where subscription video and audio services expect to clean up - TiVo predicted it would add up to 375,000 new subscriptions, bringing the total TiVo households to 1.37 million. Two-thirds of the growth was to come from DirecTV subscribers, TiVo said in November.

Yet Dish Network, which doesn't have a partnership with TiVo, has offered subscribers its own DVR. On its web site, the Littleton, Colo. satellite provider said its Dish Player-DVR offers "advanced digital television recording and playback technology that lets you control how you watch television." The features include the ability to pause live TV, skip commercials on recorded programs, and record up to 100 hours of programming.

Although details of its patent-infringement filing were not immediately available, TiVo said that it was keenly interested in making sure that no one poached its technology.

"We take great pride in the fact that TiVo has created and developed the technology that revolutionizes the way people watch television," stated Mike Ramsay, chief executive officer of TiVo. "We've invested in building a comprehensive patent portfolio to protect our intellectual property and as the DVR category grows, we will be aggressive in protecting those assets." Ramsay said TiVo's strategy is to protect its intellectual property, which is laid out in more than 40 patents the company and its founders have been granted since the 1990s.

"The success of our licensing business clearly demonstrates the value the industry has placed on TiVo's technology," Ramsay said. "It's important that we protect our IP for TiVo and our licensees."

Word of the patent infringement suit was released on a newswire at 4:01 p.m., a minute after the close of the trading day on the New York Stock Exchange. In trading Monday, TiVo closed at $7.58 a share, down 29 cents or 3.68 percent on the NYSE. EchoStar closed at $33.86 a share, down 23 cents, or 0.67 percent on the Nasdaq.